Why Buy A House Instead of Renting?
House prices crashed in the US during the subprime crisis of 2008. A lot of homeowners ended up having a mortgage from banks, which was more than the value of the house during the crisis. Jobs were cut in the thousands across the country and a lot of people were forced to declare bankruptcy since they were unable to keep up with their mortgage payments during this period.
Consequently, confidence in buying a home reached an all-time low during the end of the last decade and the beginning of this decade. However, with stability being brought about by the government, the future is looking up for home buyers. Currently, the state of our economy is stable and financial analysts are hopeful that the next few years will see further economic growth. As a result, people are thinking seriously about buying houses again.
At the same time, there are a lot of advocates of renting who feel that this is a better option than buying. To take a reasoned decision about either option, one has to understand the difference between renting and buying a home, and then decide what to opt for, based upon their future plans.
Renting A Home
Renting a home is a scenario wherein one party (called a tenant) pays a monthly amount (known as rent) to a second party (the landlord) to temporarily enjoy living in the landlord’s property. Typically, a bipartite agreement is signed between the two parties wherein the monthly rent is mentioned as well as the duration that the tenant is legally permitted to live in the landlord’s house. After this period, the tenant is supposed to hand over vacant possession of the house to the landlord unless both parties agree to either sign a new rental agreement or extend the original rental agreement.
Buying A Home
This is a more permanent scenario, wherein one party (the purchaser) buys a house from another party (the seller) and transfers the deed to the house in his name. This has more long term implications than renting a house. Buying is a more expensive affair than renting, generally necessitating the purchaser to take a 25 or 30-year mortgage from a bank and pay this mortgage off in regular monthly installments.
When An Individual Should Rent A Home
Flexibility: If you are uncertain about your future plans, then renting a home gives you the necessary flexibility to stay in different locations and even neighborhoods as you can move at comparatively short notice.
Career & Income Uncertainty: If you have a possibility of considering relocation in the near to medium term future, then renting is a better option than buying, considering that owning home ties you down to a particular location for years to come. In case you do not have a certainty of a stable job and regular income for at least a 3 to 5 year period at the minimum, then renting is definitely a better option, considering that pay cuts or job losses affect an individual’s ability to take a loan and also to regularly service a mortgage.
No Maintenance Headaches: In the eventuality of any home repairs being needed by a tenant, in most cases, a phone call to the landlord addresses the issue. If you own a home, then all the responsibility of upkeep is yours entirely.
Downsides To Renting
You do not have much control over rent increases as a result of which long-term budgeting becomes hard to plan. Also, at the end of your rental period, even if you want to extend your stay, there is every possibility that the landlord may not agree and you’ll need to pound the streets to find another home to live in.
Why An Individual Should Buy A Home
Equity: In the case of renting, your monthly rent goes towards paying the mortgage of your landlord thereby resulting in the addition of equity to his bank account. When you buy a home, taking a mortgage, the degree of your ownership in your house increases every month you partially pay off your mortgage. In case you plan to stay in your home for around 5 to 7 years, the higher costs of buying a home are in all probability going to be offset by the accrued equity as well as increased value of your home.
Tax Deductions: Anybody renting a home does not get any tax deductions while calculating his income tax for the year. If you are a homeowner, you are permitted to treat the mortgage interest and property taxes as tax deductibles against your annual income.
Full Control and Ownership: If you want to make changes to the walls of your home or build an extension, you can do so without having to seek permission from anybody, unlike people who rent, since they will need the landlord’s permission to do so.
Buying a home is one of the most important decisions in a person’s life. However, homeowners can build long-term wealth to be used for major life expenses such as retirement, lengthy vacations or their children’s education costs. Furthermore, with the low mortgage rates currently on offer, buying is a much smarter decision rather than renting. There is no better time than now to buy your own home, not only to build equity but also to have a place of your very own where you and your family can enjoy complete peace of mind for years to come.
Contact Plex Developments, Edmonton’s premier infill builder, to learn more about buying your infill home!
14308 97A Avenue
Edmonton, AB T5N 0E9
(587) 745 – 1322